CFA, Finance, FRM

CFA ® or FRM ®: Which is Better Course?

CFA ® or FRM ®: Which is Better Course?

One of the most common questions observed among financial professionals is which course should they pursue- CFA ® or FRM ®? Both of these credentials are quite prestigious and they are equally recognized worldwide.

Let us have a detailed look at both the certifications, their scope, and the career prospects offered by each of these courses.

A holistic view:

  • FRM which stands for Financial Risk management is a renowned certified course offered by GARP. If you are more passionate and interested in assessing and managing risk then FRM is the appropriate option for you.
  • CFA known as Chartered Financial Analyst is a globally accepted certified course from the CFA Institute. If you are more inclined towards investment analysis and portfolio management then CFA is the right for you.
  • The main difference is FRM focuses on risk management whereas, CFA is widely based on investment management areas.

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Exam Structure:

  • FRM Level 1 & 2: Both the levels have multiple-choice questions (level 1- 100 questions, level 2 – 80 questions) which has to be completed within a time-span of 4 hours each.
  • CFA Level 1: Has 240 multiple choice questions, conducted in 2 sessions. Each session is 3hours long, so the total duration is 6 hours. CFA Level 1 exam is changing to a Computer-based exam with 180 questions.
  • CFA level 2: Exam format is mini case studies with 6 multiple choices, also conducted in 2 sessions. Each is 3hours long and this exam also has to be completed in 6 hours.
  • CFA level 3: This level consists of 8 to 12 essay questions and 10 multiple choice questions that have to be completed in six hours and is written in two sessions. The essay questions are graded by hand.
  • FRM has 2 levels and CFA has 3 levels. FRM level 1 & 2 can be taken on the same day. Both the exams require 300-350 hours of study for each level.

Exam Dates:

  • FRM:  Both FRM level 1 and 2 are conducted twice a year in the months of May and November. Both the exams can be taken on the same day.
  • CFA:   CFA level 1 is conducted twice a year in months of June and December. CFA level 2 and 3 are conducted only in the month of June.

Exam Curriculum:

FRM Level 1 focuses on the following topics:

  • Foundations of risk management.
  • Quantitative analysis.
  • Financial markets and products.
  • Valuation, and risk management.

FRM Level 2 focuses on the following topics:

  • Market risk measurement and management.
  • Credit risk measurement and management.
  • Operational risk management.
  • Liquidity and treasury risk measurement and management.
  • Risk management and investment management.
  • Current issues in financial markets

CFA focuses on 10 topics:

  • Ethical and professional standards.
  • Corporate finance.
  • Economics.
  • Financial reporting and analysis.
  • Quantitative methods.
  • Alternative investments.
  • Derivatives.
  • Equity investments.
  • Fixed income.
  • Portfolio management and wealth planning.

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Pass Rates:

  • FRM: The passing rates for both the levels are around 40-50%.
  • CFA:  The passing rates for all three levels are around 40-50%.

Job Prospects:

  • FRM will provide you prospects related to risk management such as credit risk analyst, market risk analyst, compliance analyst, etc.
  • CFA will provide you opportunities such as portfolio manager, research analyst, investment banking analyst, consultant, etc.

If you want a specialization in Risk Management then go for FRM but if you are open to extensive areas in Finance then CFA is the certification for you.

 

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Job Opportunities for FRM Candidates

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